Having studied, written on and engaged in public discussion about transnational corporations (TNCs), I have reached the conclusion that we are not collectively equipped to think about the kind of power that they represent, the silent way they exercise their specific form of sovereignty and the numerous mechanisms that allow them to circumvent the law wherever they operate.

To illustrate this, I will focus on just one corporation –Total – as a textbook case, and show what it is capable of globally, rather than piecing together several examples that could be accused of being selectively chosen just to satisfy our research needs.

Total is a corporate group headquartered in France, with operations in 130 countries, 100,000 employees and ‘collaborators’, and a daily production of the equivalent of 2.8 million barrels of oil. In 2018, Total reported net profits of $13.6 billion.

This energy giant, the world’s fifth-largest oil company and which has been around for almost a century, merits attention in view of the fact that it has been the subject of very little analysis, despite its shocking track record in human rights, the environment, public health and business ethics.

We begin by defining TNCs, disproving the image of Total as ‘a French oil company’, as is commonly believed. Each of these terms – ‘a’, ‘French’, ‘oil’ and ‘company’ – is misleading.

‘A’

First, by definition, transnational groups are not ‘a’ or ‘one’ company and do not formally constitute one legal entity, but hundreds of them – including its various subsidiaries, trusts, holdings, foundations, specialised firms and private banks.

These structures are legally autonomous, bound only by the laws of the jurisdiction in which they were created, but are in fact part of the networks that form transnational groups. They bill and even provide loans to each other.

Total has nothing in common with a local corner shop: it comprises 1,046 consolidated companies controlled by its board of directors on behalf of a common shareholder base.

If we were to imagine Total as an octopus the size of the Earth, the numerous states where its tentacles lie legislate only on what the tentacles within their territory do there; they are treated in isolation, as if they were not legally governed by the same brain or anything other than themselves. Total’s subsidiaries in Algeria, Bermuda, Bolivia, Myanmar, Qatar, the UK and the US have no official ties to the parent company based in La Défense in Paris, even though it coordinates their operations.

Each subsidiary is anchored in its respective territory as a local actor, while bowing to financial interests. In the global economy, Total finds all the flexibility it needs to escape the combined power of all legislation and all jurisdictions. It is at this level that, with full control over access to wealth, the subsidiary joins forces with other TNCs and can effectively dominate states.

‘French’

As for the word ‘French’, only 28% of Total is now French-owned. France no longer has any direct ownership, and institutional investors own 72% of the corporation worldwide.

In a series of waves of privatisation adopted by the Chirac, Balladur and Jospin administrations between 1986 and 1998, France got rid of its shares in Compagnie française des pétroles (CFP, owner of the ‘Total’ trademark) and in Société nationale Elf Aquitaine (trustee of the ‘Elf’ brand).

After intense negotiations, these companies merged with PetroFina at the turn of the millennium to form Total as we know it today. Chinese political authorities and the government of Qatar have since become shareholders, as have families who act as governors in their countries, such as the Frère family in Belgium or the Desmarais in Canada, for example. The latter held a seat on Total’s board of directors from 2001 to 2017. Today, US-based BlackRock is the majority shareholder of Total.

Since Total has no shareholder ties with France, its ‘French’ side amounts basically to its communications strategy. Back in 2015, the Énergies & environnement website announced that ‘[i]n 2012, 65% of its capital invested in refining and petrochemicals was concentrated in Europe, but the French oil company wants to reverse the trend by increasing the share of this capital in Asia and the Middle East to 70% by 2017’.

The corporation has invested enormously in megastructures, such as the one in Jubail in Saudi Arabia: investments of close to $10 billion guarantee Total 400,000 barrels of oil per day. Social and tax obligations are less strict in Saudi Arabia than in France. The corporation reduced the number of refineries in the city’s territory from eight to five – six including petrochemical sites. These are now generally either making a loss or their installations have been turned into niche entities.

‘Oil’

Screenshot of website: promoting its all-round energy solutions.

Total, the ‘oil company’, is reducing its focus on oil and petrochemicals and turning to diversification as a means to establish a place for itself in the sectors that will be favoured once it and its peers have depleted the last available oil deposits. Total clearly plans to exploit its deposits to the very last drop.

By the 2040s, 35% of Total’s energy is expected to be produced from oil, 50% from gas and 15% from low-carbon energy sources such as biomass, solar power and storage. If global warming does not get the better of humanity after we have burned all the available fuel, Total anticipates having already redirected its distinguished customers towards its new energy markets.

The ‘Gas, Renewables & Power’ subsidiary is now Total’s fourth main business segment. Before its creation, management had plans for Exploration & Production (EP), Refining & Chemicals (RC) and Marketing & Services (MS)..‘The Gas, Renewables & Power segment spearheads Total’s ambitions in low-carbon businesses by expanding in downstream gas and renewable energies as well as in energy efficiency businesses’, it declared in its unique style.

Total uses the hazardous technique of hydraulic fracturing or ‘fracking’ in Australia, Denmark, and the UK and is aggressively arriving in or returning to the US, Argentina or Algeria to extract gas buried in rocks by causing underground tremors and whirlpools that potentially threaten the entire groundwater system – that is, when it is not launching deep-water gas prospecting and drilling projects such as those in Cyprus, Iran or Greece.

Total is also developing its shale-gas operations to target the markets for electricity and natural gas. For a while, it could rely on the support of Jean-Louis Borloo, the former French environment minister, who later became a ‘super-lobbyist for electricity in Africa’, as Le Monde newspaper put it. Borloo attempted to pave the way for relations in Africa among development fund directors, African leaders and French corporations such as Bolloré, Dassault, EDF, Total and Veolia that support the development of a vast continental electricity market.

This does not, however, stop Total from advocating a clean economy, as it also produces solar panels. It became the world leader of solar energy after it acquired the US-based SunPower corporation in 2011 and then Saft in 2016 and it dominates the energy-storage sector.

This would make it a green company if we were to ignore – as it tries to do – the heavy metals that this industry requires. Total also carries out research in the energy-harvesting sector with the support of the Norwegian government. This new practice relies on the use of solvents that are capable of absorbing CO2 under certain conditions and its underground storage. Total’s efforts in this area are entirely self-serving, positioning itself ‘pre-competitively’ to respond to a technological demand that is anticipated from China.

Total is also drawn to agrofuels despite the threat they represent to food sovereignty, particularly in the Global South. It imports massive amounts of palm oil from South-East Asia to its French facility in La Mède – it needs 450,000 tonnes to produce approximately 500,000 tonnes of agrofuels per year – even though this operation is costly in terms of production, transport and processing, and thus, energy. Very little recycled oil will be included in their composition.

As the CGT (French General Confederation of Labour) delegate Fabien Cros wrote on Total’s website, ‘All of this has a much bigger carbon footprint than if diesel were used directly! In sum, to produce this so-called green energy, we will pollute the rest of the world’. The satellite states in the Françafrique framework, such as Gabon, are following suit and plan to gradually convert to the agrofuels economy, rather than adopting agricultural policies to promote their own food sovereignty.

As the growth-based economic order must in no circumstances be stopped, Total is seeking to diversify it. There are several examples of this in 2019 alone. In addition to developing pipelines, lubricants, plastics and other petrochemical products, the corporation is involved in the battery and wood-pellets sector, and has also penetrated the hydrogen sector.

Despite the high cost of the chemical reaction needed to produce this energy, there is already lobbying for its promotion. Thus, to the gasoline sold through Total’s vast global network of retail service stations, we can now add natural gas and roadside charging stations for electric vehicles.

Total is busy not only producing these energy sources, but also trading them. It invests in structures designed to develop complex ways of selling these goods and has made some advances in the US and Japan.

In 2017, its subsidiary Total Marine Fuels Global Solutions positioned itself to sell massive amounts of marine fuel produced from liquified natural gas in Singapore. In 2016, it acquired the Belgium firm Lampiris, which buys 78% of the electricity that it itself sells. It returned to France in 2018 with Direct Energy.

It also plans to invest directly in its competitors’ funds such as Shell’s subsidiary in Nigeria or in Saudi Aramco in Saudi Arabia. Furthermore, it has invested in the Internet of Things and cutting-edge computer research. The corporation cannot claim that its operations are zero risk when it is developing a drone that is meant to ‘assess the extent of accidental pollution’.

‘Company’

Given the scale and level of diversity of Total (and its peers), it is no longer a ‘company’ in the sense of a meeting of duly identified business associates, nor an ‘enterprise’ understood as a structure engaged in a particular sector. Rather, it has become a power, a sovereign authority that sets itself apart from states and dominates and manipulates them to achieve its own self-serving goals.

A new form of sovereignty is developing. Total now has their say on and meddle in everything.

Being a power rather than a simple company requires knowing how to take advantage of all situations – when, that is, the situation is not under its control in the first place. This diversity of activities and the fact that the company controls a multitude of aspects in the energy sector – prospecting, exploitation, transport, refining, processing, storage, distribution, trade, and so on – enables it to profit from each and every situation. Even though the price of oil dropped by 17% in 2016, the corporation still earned profits of at least $8.29 billion.

Johann Corric of Le Revenu observed that ‘The group’s accounts continue to be kept afloat by its downstream activities (refining, petrochemicals) and by a cost reduction plan implemented ahead of schedule. It exceeded its target of 2.4 billion dollars in savings for 2016 by 400 million dollars’.

Total has made reducing production costs a priority, which results in miserable wages, demanding working conditions, different treatment for local craftspeople and expatriates – these methods obviously please only the firm’s most powerful stakeholders: the Fitch credit-rating agency explicitly compensated Total for its strict management policies by stabilising the group’s rating at ‘AA–’.

Those nostalgic for state sovereignty are reluctant to consider the disturbing scope of these new power relations. Theoretically, as the guardian of the legitimate use of violence and the exclusive power to legislate, only the state should be in a position to assert its prerogatives over any private companies and foreign entities operating in its territory.

However, a new form of sovereignty is developing. Representatives of Total, its marketing industry and its tentacular PR services now have their say on and meddle in everything.

Total’s CEO Patrick Pouyanné, like his predecessor Christophe de Margerie, is involved in everything: the issue of the Syrian refugees, the trade embargo imposed on Russia, academic research, the revival of local industries, financial or technical support for small businesses, the fight against diabetes, museum exhibitions, the restoration of historical monuments and rejecting all social movements.

Recognised by states as a sovereign power itself, Total signed a declaration of support for the Paris Agreement at COP21 in which it pledges to work to keep global warming at the 2°C mark – even though in private, Pouyanné spoke about a significant increase of 3°C to 3.5°C.

Ideology of power

Our interest in using Total as a case study also stems from the fact that its representatives have become particularly vocal. Successive CEOs and various representatives do not hesitate to comment on their activities and even on current political affairs, giving us an insight into their fundamental ideology. In doing so, they inform the public of the ideological means they use to justify, in their own eyes, their authority. They present themselves in the long term as resolutely sovereign.

Surreal video in which TOTAL mocks media observers

We analysed three types of sources:

Total’s documents and public statements, as well as the publications of its historians and other intellectuals, which allow us to confirm by its own admission a whole series of facts.

We took these claims seriously, so our work was not so much a critique of Total’s actions as an analysis of a system that allows so many actions to seem legal. We then asked ourselves about the very meaning of the phrase ‘it is legal’ in the various contexts in which it is used. We also examined how the corporation itself sometimes helps in drafting the legal frameworks that allow such actions to be considered legal.

Second constant: let bygones be bygones

When a journalist asked former CEO Christophe de Margerie about the suspicious commissions Total paid the Iranian regime in return for the concessions that it was awarded in the 1990s, he responded, ‘It’s good that you are starting to ask questions about dates because we can also talk about the Saint-Barthélemy massacre’ – which took place in 1572.

The firm’s representatives suggest that the historical slate should be wiped clean, perhaps in part to clear their conscience. For them, Total’s collaboration with the Apartheid regime is no longer upfor discussion, even if its own documents boast that it has been in South Africa since 1954.

The TNC’s discourse minimises the past to favour only the present or a projected future. However, a firm’s capital, especially when it is colossal, is also its memoire, recording its actions in specific historical contexts. Capital is clearly crucial for any corporation, enabling it to take out loans, build partnerships, raise its share value on the stock market and invest in new projects in order to constantly expand it.

Minimising the past prevents the public from understanding how capital is accumulated – the very capital that now gives the group the means to launch multiple initiatives, reminding us of the saying, ‘the past guarantees the future’.

Third constant: don’t do politics

In issues involving Total in France and abroad, its representatives insist on saying that they do not do politics, then to add, only geopolitics. Together with other private-sector firms of the same magnitude, the corporation manages to shape much of the global industrial and financial order through a series of imperatives making it difficult for states to clearly exercise their sovereignty.

Whether in the chapter on procurement, pricing, diplomacy, lawsuits filed with ad hoc tribunals to ‘settle trade disputes with states’, lobbying and the establishment of power relations in regard to investment plans, everything is done to stifle debate on how liberal globalisation operates.

This is what led the current CEO, Patrick Pouyanné, to say that the left–right divide is obsolete and elections now merely endorse the neoliberal order that his group and several others helped to establish.

Moreover, since Total is active in all phases of the chain of exploration, exploitation, processing and distribution of energy assets, it can often avoid influencing the broader economic context, contenting itself with taking advantage of the stage of the chain favoured by the state of affairs at the time.

Conclusion

All these considerations led Total’s CEO to present himself as a sovereign ruler. After Patrick Pouyanné’s tête-à-tête with Vladimir Putin, which received all the pomp usually reserved for heads of state, he was quoted as saying, ‘Even if Total is a private company, it is the biggest French company and, in a way, it represents the country itself’.

Over and above this outrageous declaration, provoking not even a reaction on the part of the French president, the authority that corporate directors claim for themselves is supranational and specifically business-related. It is this power that now calls for further analyses and greater public awareness.

We need to treat Total not just as a large energy corporation, but rather as a private, multi- and transnational, private, sovereign power that serves the interests of a highly diversified shareholder base and intervenes in innumerable political, cultural, social, financial, industrial and academic issues.

This article is an abridged version of Alain Deneault's book (In French), De quoi Total est-elle la somme ? Multinationales et perversion du droit, éditions rue de l’Échiquier et Écosociété (2017). Full references can be found in the book.

ABOUT THE AUTHOR

Alain Deneault is Canadian correspondent for the International College of Philosophy (Paris), Philosophy professorat the Université de Moncton/Acadian Peninsula and Author of De quoi Total est-elle la somme ? and Le Totalitarisme pervers (Rue de l’Échiquier · Écosociété)

12. Court stops construction of Kenya’s coal power plant. Petitioners from Lamu celebrating the judgment of the National Environment Tribunal, 26 June (Twitter/(@deCOALonize)

Sudan’s Third Revolution

Sudan’s “Third revolution” began in the northern town of Atbara in December 2018. Street protests began after the removal of a wheat subsidy, escalating to sustained civil disobedience for about eight months. The protests led to a major political shift, when President Omar al-Bashir was deposed after thirty years in power.

A Transitional Military Council (TMC) replaced al-Bashir, but protesters held their ground, and in July and August 2019 the TMC and the civilian-led Forces of Freedom and Change alliance (FFC) signed a Political Agreement and a Draft Constitutional Declaration legally defining a planned 39-month phase of transitional state institutions and procedures to return Sudan to civilian democracy.

In August and September 2019, the TMC formally transferred executive power to a mixed military–civilian collective head of state, the Sovereignty Council of Sudan, and to a civilian prime minister (Abdalla Hamdok) and a mostly civilian cabinet, while judicial power was transferred to Nemat Abdullah Khair, Sudan’s first female Chief Justice.

Chilean protests challenge neoliberal state

The 2019 Chilean protests are ongoing. The protests began in Santiago, Chile’s capital, as a coordinated fare evasion campaign by secondary school students protesting increases in metro fares. This led to spontaneous takeovers of the city’s main train stations and eventually to open confrontations with the Chilean Police.

These protests morphed into a nationwide call to address inequality and improve social services. Soon millions were on the streets, forcing President Sebastián Piñera to increase benefits for the poor and disadvantaged,and to start a process of constitutional reform.

On 25 October, over a million people protested against President Piñera, demanding his resignation. Piñera has already canceled some interest payments on student loans, but protesters are demanding more relief for education payments and related debt.

5.5 million women form human chain in Kerala, India

On Jan. 1, 2019, 5.5 million women in the Indian state of Kerala (population 35 million) built a 386-mile human chain, spanning almost the entire state,to bring light to the issues women face in India.

The women gathered and took a vow to “defend the renaissance traditions” of their state, and to work towards women’s empowerment. In particular, they marched for an end to violence and intimidation against women trying to enter Kerala’s Sabarimala temple, a popular Hindu pilgrimage site.

Undoubtedly larger than the historical Women’s March in Washington, D.C. in 2017, this was one of the largest mobilizations in the world for women’s rights.

Algerian protests pave the way towards democracy

These protests, without precedent since the Algerian Civil War, have been peaceful and led the military to insist on president Bouteflika’s immediate resignation, which took place on 2 April 2019. By early May, a significant number of power-brokers close to the deposed administration, including the former president’s younger brother Saïd, had been arrested.

On 1 November, the metro was shut down in Algiers and trains into the city were canceled following a social media campaign calling for demonstrations. Police roadblocks also caused traffic jams. For the 37th weekly Friday protest, which coincided with the celebration of the 65th anniversary of the start of the Algerian War for independence from France, tens of thousands of demonstrators called for all members of the system of power in place to be dismissed and for a radical change in the political system.

There has not been an overhaul of the political regine, and protestors have returned to the streetsafter an election held on 12 December, arguing that the winner Abdelmadjid Tebboune, 74,and the four other candidates were closely linked with the rule of the deposed Mr Bouteflika.

The statement calls on member states to “promote alternatives to conviction and punishment in appropriate cases, including the decriminalization of drug possession for personal use”.

While a number of UN agencies have made similar calls in the past, this CEB statement means it is now the common position for the entire UN family of agencies. Crucially, the UN Office on Drugs and Crime – the lead UN agency on drug policy – has also endorsed the position; finally clarifying their previously ambiguous position on decriminalisation.

The statement also positions drug policy clearly within public health, human rights, and sustainable development agendas. It represents a welcome and significant step towards ‘system wide coherence’ within the UN system on drug policy.

This has been a key call of civil society groups long frustrated by the lack of coherence across the UN and the marginalisation of health, rights and development agendas by UN drug agencies whose historic orientation has been towards punishment, law enforcement and eradication.

The United Kingdom bans fracking

In October, Scotland banned fracking with immediate effect, arguing that it is “incompatible” with tackling the climate change emergency.The Scottish government said the position of “no support” for fracking followed “a comprehensive period of evidence-gathering and consultation” that started in 2013. The decision thus came after six years of deliberations.In November, England also put a halt to fracking in a watershed moment for environmentalists and community activists.

The decision has been welcomed as a “victory for common sense” by green groups and campaigners who have fought for almost a decade against the controversial fossil fuel extraction process.

Same-sex marriage reform in Asia

Taiwan legalized same-sex marriage on 24 May 2019, following a 2017 constitutional court ruling. Despite intense local and regional opposition, Taiwan became the first nation in Asia to permit same-sex marriage.

Thailand seems to be well on its way to becoming the second Asian country, and the first in South-East Asia, to legalize same sex unions.

Court stops construction of Kenya’s coal power plant

Kenyan judges stopped plans to construct the country’s first ever coal-powered plant near the coastal town of Lamu, a UNESCO World Heritage Site. Local communities and criticsargued that the plant would have dire economic and health effects.

A tribunal canceled the license issued by the National Environmental Management Authority, arguing that the Authority had failed to conduct a thorough environmental assessment.The tribunal ordered developer Amu Power to undertake a new evaluation. The environmental court also faulted the Chinese-backed power plant for failing to adequately consult the public about the initiative, and cited insufficient and unclear plans for handling and storing toxic coal ash.

The project has drawn protests since its inception, with environmentalists saying coal has no place in a country that already develops most of its energy from hydroelectric and geothermal power. Campaigners have also argued that the plant will devastate the island of Lamu, a major tourist attraction, a UNESCO heritage site, and the oldest and best-preserved example of a Swahili settlement in East Africa.

The ruling was a win for environmental activists and local communities, who for three years argued the coal plant would not only pollute the air but also damage the fragile marine ecosystem and devastate the livelihoods of fishing communities.

While the latest verdict delays the coal plant’s development, it doesn’t put an end to it. Amu Power can still apply for a new license or appeal the decision within the next month. For now, though, local communities are celebrating the win.

Public banks are being embraced across the United States

In October 2019, AB 857 — the grassroots-generated, people-powered Public Banking Act — became law in California. This was the outcome of years of work by the California Public Banking Alliance, which did the work of educating legislators, drafting language, and generating massive statewide public support for the bill.

The bill opens the way for public banks to offer a people-controlled alternative to the private, profit-driven Wall Street banks that have failed to serve the public. It paves the way for a growth in public banking in California, the largest state economy in the largest national economy in the world.

Progressives and conservatives across the United States are pursuing more than twenty-five initiatives for public banks. Thirty of the fitty states have proposed legislation in support of publicly-owned banks, and more than fifty organisations are promoting public banks.

Listen to our podcast on Public Banks to see why this is a big development.

Hong Kong protestors showresilience and creativity in face of repression

Hong Kong has been rocked by pro-democracy, anti-government protests for more than five months now. The protests began in June with one main objective—for the government to withdraw a controversial bill that would have allowed extradition to mainland China. Critics worried Beijing could use the bill to prosecute people for political reasonsunder China’s opaque legal system.

By the time Hong Kong’s leader, Carrie Lam, agreed to withdraw the bill, it was too late to quell the movement, which quickly grew to include five major demands, all of them related to expansion of democratic space.

The protests have also led to big pro-democracy votes in their legislature, and some of the biggest mobilizations for democracy ever seen. The protests are ongoing at the time of writing, but Lam’s capitulation to the first demand has only emboldened protesters to pursue more substantial concessions.

Swiss women strike for gender equality

Hundreds of thousands of Swiss women went on strike to protest gender inequalities on 14 June 2019, precisely 28 years after the historic 1991 women’s strike in Switzerland that pressured the government to implement a constitutional amendment on gender equality. The 1991 strike led to the passage of the Gender Equality Act five years later, giving women legal protections from discrimination and gender bias in the workplace.

The women’s strike – known as Frauenstreik (German) and Grève des Femmes (French) online – consisted of demonstrations in the country’s major municipalities for equal pay, recognition of unpaid care work, and governmental representation.

The Swiss Parliament in Bern honored the strike with a 15-minute break in its business. In Basel, a giant fist was projected onto the Roche pharmaceutical company building. In some cities, protesters changed the names of streets to honor women. The Swiss paper, Le Temps, left sections blank where articles edited or written by women would have run.

While demands for equal pay dominated the strike, marchers also called for better protections against domestic violence and workplace harassment.

School kids and workers lead historic wave of climate actions

As global temperatures heat up, so too do demands for action. 2019 saw movements such as Extinction Rebellion, the Week of Global mobilization at the United Nations, and many other protests worldwide.

In September, youth climate activists across the world went on strike to demand immediate action from policy makers, in what has been described as the biggest protest and mobilization since the Anti-Iraq War marches. They brought the issues of climate and labour together by calling for a global climate strike in September 2019. An historic 7.6 million students, (grand) parents and workers from 185 countries participated. More than 70 trade unions around the world supported the general strike and the number of climate groups demanding just-transitions for fossil fuel workers are steadily increasing.

Investors are significant shareholders if they own over 5% of a company’s shares. The sample of firms here are the largest 205 public and private firms across the world, who have more than $50 billion in 2014 sales.

Public Institutions

An Institution is considered ‘public’ if guided by a public mandate, governed under public law and/or publicly-owned by state authorities or public sector entities.

Quantitative Easing

QE is an unconventional monetary policy aimed to stimulate economic activity. Central banks create new money and use this to buy government and corporate bonds from financial markets.

Top 17 Asset Management Firms

BlackRock, US

Vanguard Group, US

JP Morgan Chase, US

Allianz SE, Germany

UBS, Switzerland

Bank of America Merrill Lynch US

Barclays plc, UK

State Street Global Advisors, US

Fidelity Investments (FMR), US

Bank of New York Mellon, US

AXA Group, France

Capital Group, US

Goldman Sachs Group, US

Credit Suisse, Switzerland

Prudential Financial, US

Morgan Stanley & Co., US

Amundi/Crédit Agricole, France

G30

The Group of Thirty (G30) is a privately funded international group of 30 top financiers, academics and policy makers, whose aim is to influence policy and discourse in international finance and global politics.

Trilateral Commission

The Trilateral Commission is an unofficial (i.e. not officially overseen by governments) organisation where 375 global elites from 40 countries meet to tackle pressing international issues.

Shadow Banking

Shadow banking are financial institutions which lie outside of the formal banking regulatory system despite performing similar functions to banks, such as providing credit. Due to this, they raise and lend money more easily, but with considerably more risk.